0.5540: New Zealand Dollar dips to 19-month lows ahead NFP numbers

NZD/USD extends losses on risk-averse markets and hits fresh 19-month lows at the 0.5540 area.
The US Dollar is outperforming peers amid safe-haven demand and market expectations of a strong NFP report later in the day.
New Zealand data released this week has increased concerns about the uncertain economic outlook.

Guillermo Alcala FXStreet

The New Zealand Dollar (NZD) is falling sharply on Friday as the US Dollar (USD) outperforms its major currency peers amid the risk-off mood and market expectations of a strong US Nonfarm Payrolls (NFP) report later in the day. The NZD/USD pair has extended losses below previous lows in the 0.5560 area to hit fresh 19-month lows at 0.5539 so far.

Investors are seeking refuge in the safety of the Greenback as global equity markets plunge amid concerns that the Democrats' victory in the US midterm elections will lead to further regulation in the AI industry and put the brakes on plans to build new data centers.

New Zealand's macroeconomic data casts doubt on further RBNZ rate hikes

Against this background, data from New Zealand released this week has failed to support the Kiwi. The Unemployment Rate increased to 5.7% in the third quarter, from 5.6% in the previous one, against market expectations of a decline to 5.5%, as net employment fell unexpectedly.

These figures follow a sharper-than-expected decline in consumer inflation in Q3, which might have prompted the Reserve Bank of New Zealand (RBNZ) to leave interest rates unchanged, taking markets by surprise last week and triggering a sharp reversal in the NZD.

Rabobank analysts observe that “despite some strong green shoots for New Zealand in Q1 2026, this was ahead of the headwinds caused by the Iran war,” underscoring that the RBNZ might find further reasons to hold back further monetary tightening, ultimately adding pressure on the Kiwi.

The US Dollar, on the contrary, remains buoyed by US economic exceptionalism rhetoric. US Gross Domestic Product (GDP) growth beat market consensus last week, and labour data released in previous days has heightened expectations of a positive surprise in October’s Nonfarm Payrolls report, due later in the day.

Analysts at ING argue that a "decent jobs number today will confirm the Fed's understanding that the US jobs market is 'solid'" and, in turn, "could provide some support to short-dated rates and the Dollar.”

Economic Indicator

Nonfarm Payrolls

The Nonfarm Payrolls release presents the number of new jobs created in the US during the previous month in all non-agricultural businesses; it is released by the US Bureau of Labor Statistics (BLS). The monthly changes in payrolls can be extremely volatile. The number is also subject to strong reviews, which can also trigger volatility in the Forex board. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish, although previous months' reviews and the Unemployment Rate are as relevant as the headline figure. The market's reaction, therefore, depends on how the market assesses all the data contained in the BLS report as a whole.

Why it matters to traders?

America’s monthly jobs report is considered the most important economic indicator for forex traders. Released on the first Friday following the reported month, the change in the number of positions is closely correlated with the overall performance of the economy and is monitored by policymakers. Full employment is one of the Federal Reserve’s mandates and it considers developments in the labor market when setting its policies, thus impacting currencies. Despite several leading indicators shaping estimates, Nonfarm Payrolls tend to surprise markets and trigger substantial volatility. Actual figures beating the consensus tend to be USD bullish.

Economic Indicator

Unemployment Rate

The Unemployment Rate, released by the US Bureau of Labor Statistics (BLS), is the percentage of the total civilian labor force that is not in paid employment but is actively seeking employment. The rate is usually higher in recessionary economies compared to economies that are growing. Generally, a decrease in the Unemployment Rate is seen as bullish for the US Dollar (USD), while an increase is seen as bearish. That said, the number by itself usually can't determine the direction of the next market move, as this will also depend on the headline Nonfarm Payroll reading, and the other data in the BLS report.

AUD/USD hangs near three-week low, below 0.6950 as traders await US NFP report

AUD/USD hits a three-week low during the Asian session on Friday as the RBA’s dovish shift and a rout in equity markets weigh on the risk-sensitive Aussie. However, the recent slump in US bond yields to a two-month low keeps US Dollar bulls on the back foot and limits losses for the currency pair as traders look to the US NFP report for a fresh impetus.

USD/JPY bounces off three-week low; keeps the red near 157.65 as focus remains on US NFP

USD/JPY bounces off the weekly low set during the Asian session, as bears turn cautious ahead of the US NFP report due later this Friday. The upside seems limited as the recent slump in US bond yields and hopes of Iran war de-escalation undermine the US Dollar. Moreover, a hawkish BoJ and intervention risks support the Japanese Yen, capping the pair.

Gold pares intraday losses; down a little below $4,100 as focus remains on US NFP

Gold recovers most of its early intraday losses, trading with a mild negative bias near $4,070-$4,075. The US Dollar extends Thursday's recovery from its lowest level since late September, exerting some downward pressure on the commodity. Furthermore, a hawkish US Federal Reserve contributes to the precious metal pullback from a two-week high, which it touched the previous day. Bearish traders, however, seem hesitant ahead of the release of US monthly employment details, which should provide a fresh impetus to the precious metal.

Canada Unemployment Rate set to hold at 6.5% as hiring recovers

Statistics Canada will release its October Labour Force Survey on Friday at 13:30 GMT, with markets anticipating a modest recovery in employment following September's sharp decline. The Unemployment Rate will also be closely watched, as the latest figures could influence the Canadian Dollar.

US Nonfarm Payrolls expected to pick up in October

The United States Bureau of Labor Statistics is set to release October Nonfarm Payrolls data on Friday at 13:30 GMT. The report is expected to show an increase of 65K jobs, up from 29K in the previous month.

US Dollar breaks below 101.50 as Democrats sweep Congress

The US Dollar (USD) comes under heavy selling pressure on Wednesday, with the US Dollar Index (DXY) falling around 0.5% to trade near 101.35 after sliding below the 101.50 level. The Greenback retreats to its lowest level in four weeks as investors reassess the political and economic outlook following the Democratic Party's sweeping victory in the United States (US) midterm elections.